GBP/ USD – Pound Surges as US Employment Numbers Sparkle

GBP/USD is sharply higher in Thursday’s North American session. The pair has gained almost a full cent, and has crossed over the 1.50 line for the first time this week. The Bank of England released its monthly bulletin today, and there were a host of US releases. The highlight was Unemployment Claims which easily beat the estimate.

US Unemployment Claims looked sharp, beating the market estimate for the third straight week. The key indicator, released every week, pointed to 332 thousand new claims, well below the estimate of 348 thousand. It was also the second-lowest number of new claims in 2013. PPI posted a gain of 0.7% and Core PPI rose 0.2%. Both inflation indicators matched the estimate. Current Account recorded a deficit of $110 billion, just beating the forecast of $111 billion. In Canada, Thursday’s releases were uneventful. NHPI came in at 0.1%, exactly as expected. Capacity Utilization Rate was almost unchanged, at 80.7%. The estimate stood at 80.8%.

In the US, economic indicators continue to point upwards. This is a welcome change from the pattern we have been seeing for many months, of a mix of strong and weak data, sometimes from the same sector of the economy. The markets have reacted with a thumbs up, and the US dollar has been broadly stronger as a result. Employment numbers continue to be stellar, and this week saw strong retail sales figures, indicating stronger consumer spending. The positive readings have spread to other sectors as well, as Import Prices, Business Inventories and Crude Oil Inventories all beat their respective estimates. If the good news continues and market sentiment continues to improve, look for the US dollar to post gains against other currencies.

In Italy, the political deadlock which has paralyzed the country for several weeks continues. The Italian Parliament will meet on Friday for the first time since the elections to try and sort out the mess. Most Italians do not want to go through yet another election, but so far, the political leaders have not made little progress in coalition negotiations. The financial markets remain concerned, and Italy’s three-year borrowing costs rose to their highest since December at an auction earlier this week. This comes right after Italy was treated to a credit downgraded by the Fitch ratings agency. If Italy fails to form a government soon, the crisis could impact on the Eurozone, and the euro could take a tumble.

GBP/USD for Thursday, March 14, 2013

1.5019 H: 1.5038 L: 1.4915

GBP/USD Technical

The pound has taken flight in Thursday trading, barreling past the all-important 1.50 level. The pair is facing resistance at 1.5053. Given the pair’s strong upward momentum, this line could be tested. There is stronger resistance at 1.5138. On the downside, 1.4988 now finds itself in a support role. The next support level is at 1.4880.

• Current range: 1.4988 to 1.5053

Further levels in both directions:

• Below: 1.4988, 1.4880, 1.4818, 1.4766 and 1.4618
• Above: 1.5053, 1.5138, 1.5203 and 1.5309

OANDA’s Open Positions Ratios

The GBP/USD ratio is not showing any activity in the Thursday session. This is not reflected in the current movement of the pair, as the pound has rallied and posted sharp gains against the US dollar. Long positions make up a substantial majority in the ratio, indicating that trader sentiment is strongly biased in favor of the pound continuing to climb higher.

It’s been a rare occurrence in 2013, but the pound has posted sharp gains against the dollar, gaining around one cent on Thursday. With US indicators continuing to look sharp, the markets are hoping that stronger US demand will impact positively on other economies as well, such as in Asia and Europe. The pound has taken full advantage as it rallied against the dollar, but it remains to be seen if the pound can capitalize and continue to climb higher.

GBP/USD Fundamentals

• 00:01 British BOE Quarterly Bulletin
• 12:30 US PPI. Estimate 0.7%. Actual 0.7%
• 12:30 US Unemployment Claims. Estimate 348K. Actual 332K
• 12:30 US Core PPI. Estimate 0.2%. Actual 0.2%
• 12:30 US Current Account. Estimate -111B. Actual -110B
• 13:00 US FOMC Member Sarah Bloom Raskin Speaks
• 14:30 US Natural Gas Storage. Estimate -136B. Actual -145B
• 17:00 US 30-year Bond Auction
• 21:30 US Bank Stress Test Results

*Key releases are highlighted in bold

*All release times are GMT

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.